The Mighty Dow closed above 12,000 yesterday, but the celebrations were muted. Is there doubt about where it's heading?

Our valuation model says The Mighty Dow, a.k.a., DJIA, is currently worth 17,012. Yes, you're looking at the right number. As shown in the Valuation Section below, there was a 1,036 point increase in the VVIA from last week's level of 15,976 due to the huge drop in the CPI inflation rate which was reported on Wednesday. The VVIA crossed above the actual DJIA way back on June 7, 2002 at a level of 9,576 and has stayed there ever since.

You may see a graphical display of the underlying data for the DJIA and VVIA by accessing the DJ Industrials WatchList, clicking on the Summary Row at the bottom of your screen; then clicking on Graph on the Local Tool Bar. The "All Weekly" graph of Price and Value shows how these variables have fared over the last eleven plus years. Note that the sums of the Prices and Values shown in the WatchList need to be divided by a Divisor to convert them into Indexes. The Divisor as of today's close is 0.12493117.

Now what's the point of all of this? The point is that the VVIA generally leads the direction of the DJIA. While you can see this on the graph on your computer, we use a "Doing the Dow" graph covering 36 years in our seminars which illustrates the same thing over a much longer time period. A 110-year graph of the DJIA was published in today's Wall Street Journal along with an interesting article and notable landmarks. Of course, it doesn't show the VVIA.

In addition to our valuation comparison, I expect the Mighty Dow to soar because the investment climate is similar to that of June 5, 1995 when I wrote an essay called "The VectorVest Rocket." Moreover, we have entered the juicy part of The Presidential Cycle, which is the fifteen-month period beginning in early October, two years before the presidential election and lasting until early January of the election year. (See Chapter 19 of Stocks, Strategies & Common Sense.)

So put on your seat belt and hold on to your hat, we're heading to Dow 17,500.